[By Guancha Net columnist Peng Bo]

The trade war stirred by Trump is still escalating.

On April 10, Trump announced a regional suspension of tariff increases for 90 days while imposing a 125% tariff on China. In response, the Chinese Foreign Ministry continued to state: "We will see this through to the end!"

Flouting promises, being untrustworthy, and using tariff coercion—Trump attempts to reshape the global trade order through tough measures, but this approach has sparked widespread doubt and opposition from the international community.

The Dilemma Faced by Trump and the U.S.

After Trump significantly escalated the trade war, many people's biggest question was: Why did Trump do this? Was it inevitable or accidental? On this issue, various parties continue to debate.

A significant portion of Chinese people have long realized that Trump’s imposition of tariffs on countries worldwide is, in some ways, due to the internal and external pressures faced by U.S. development, as well as his personal cognitive background and personality. Many analyses have already discussed this in detail. Therefore, there is both inevitability and contingency. It should be said that, given the current economic situation in the U.S., as president, Trump's options are not many. Under normal circumstances, to improve the increasingly deepening predicament, the U.S. has two paths it can take.

One is to continue along the path of neoliberalism. This has been the road promoted and adhered to by the Democratic and Republican establishment for a long time, with the Democrats still adhering to it today. That is, encouraging American enterprises to invest globally according to the principle of comparative advantage, selling the products back domestically. Domestically, the focus is on developing services, while also developing research and maintaining a portion of mid-to-high-end manufacturing to occupy the upstream of the industrial chain, thereby gaining the lion's share of overseas investment returns and international trade benefits, known as the "700 million shirts for one Boeing."

C919 and C909 taking flight - Commercial Aircraft Corporation of China (COMAC)

According to this development path, the U.S. economy would have relatively large room for development, capital would make a lot of money, but American manufacturing workers would face massive unemployment. However, according to the neoclassical economic theory, after capitalists make money, through the "trickle-down effect," they can benefit the lower classes. Lower-class workers transitioning from manufacturing to service jobs could also earn decent incomes.

However, decades of practice have proven that the "trickle-down effect" in economic theory has not fully materialized. After capitalists made money, they did not provide broad benefits to the public; middle and lower-class citizens did not receive corresponding returns but instead fell into widespread poverty, losing hope, and became extremely dissatisfied.

At the same time, to some extent, American manufacturing has become hollowed out. Although America's manufacturing remains the world's second largest, the consequences are already quite severe. If this trend is not reversed, American manufacturing will undoubtedly further hollow out. Then, if America were to go to war with China, not only would it be unable to produce military ships and planes, but it might also lack reliable manpower. To quote Lin Zexu, "In several decades, America will not have any warships to resist enemies, no aircraft to resist enemies, and no soldiers to resist enemies."

Therefore, Stephen Moore, chairman of Trump's Economic Advisory Council, said: "...Many of our supply chains cannot survive without relying on our biggest rival. We obviously should not depend on our biggest rival to provide equipment crucial to ensuring the safety of our population." The U.S. clearly feels great unease about this.

The other path is to go against the neoliberal path. No longer pursuing free trade, but imposing higher tariffs on other countries, closing off the domestic market, and thereby protecting domestic manufacturing. —This was the development route from the founding of the United States until the 1920s and 1930s, which once effectively promoted the development of American manufacturing. The object of Trump's admiration, the 25th President McKinley, once greatly increased tariffs, raising the import commodity tariff rate to 49.5%.

McKinley publicly declared: "We have become the world's largest agricultural country; we have become the world's largest mining country; we have also become the world's largest industrial producer. All of this stems from our decades-long policy of tariff protection." This was seen by Trump as an experience of success and something he repeatedly claimed to learn from. —Many Chinese people, seeing Trump impose tariffs, assumed he wanted to take this path.

Trump

But the problem is that Trump actually doesn't want to take this path. One reason is that this path carries significant risks and has a low probability of success. From an economic theoretical perspective, this path violates economic laws and deviates from the international market, causing substantial shocks to the overall U.S. economy. In McKinley's era, adding tariffs had a relatively high chance of success economically. However, the current situation differs greatly from then. Even if there is a small probability of success, achieving domestic economic rebalancing and internal stability comes at a great cost, and it is highly likely to be unprofitable.

Another reason is that the U.S. has, through the international exchange system it originally set up, generally benefited from the entire system. Including hardworking people from many developing countries like China, sending large profits to the U.S., and dumping a large number of affordable and quality goods into the U.S., supporting a considerable portion of Americans living extravagantly, without working, enjoying an easy and comfortable affluent life. If they were to take the second path, Americans would have to give up the advantages they previously enjoyed.

Thus, for some Americans including Trump, walking this path would make them feel as though they were at a disadvantage. They hope to walk a path where the U.S. continues to enjoy significant advantages and does so sustainably, while preventing other countries from earning money from the U.S. as they used to; manufacturing will not be hollowed out, and job opportunities must remain within the domestic borders. —To get everything and give nothing. This is what Trump and others want to do.

But this is economically impossible. Therefore, they must seek another way.

Trump Tries to Find a Way Out Using Robber Tactics

Thus, Trump and his supporters are actually trying to take the third path, which is the path of robbery, extortion, and plunder. This is the path Trump is currently walking. The specific methods are as follows:

Firstly, the U.S. needs to impose relatively high tariffs on imported goods to ensure the development of domestic manufacturing and job opportunities. —This actually falls under the content of the second path.

However, as mentioned earlier, Trump does not want to bear the losses brought about by this path driving economic structural adjustments. Moreover, if other countries retaliate universally after the U.S. adds tariffs, the U.S. would also face difficulties. Trump does not want to engage in a "one-for-one" trade-off with other countries.

Therefore, the next step of Trump's policy underwent a major change: while adding tariffs, he retained space for negotiations with other countries, attempting to strike, force, and extort concessions from other countries through what he calls the "art of negotiation," using the tariff cudgel to strike fear into other nations and destroy their growth, while using America's powerful comprehensive national strength to compel other countries to support the U.S.

For example, Trump's special purpose in imposing tariffs on China is to hope that China will negotiate with him under tariff pressure, agreeing to sell TikTok to him. However, even if China sells TikTok to Trump, Trump will not stop. He will continue to use tariff increases as a means to force China to make concessions in other areas.

American attempts to forcibly buy TikTok

Europe's experience is similar. When Europe requested negotiations with the U.S. to cancel the new tariffs, Trump demanded that Europe must commit to purchasing $350 billion worth of energy from the U.S. as an "exchange condition."

This unreasonable demand is endless. Using a chess term from China, it is like continuously "putting the opponent in checkmate and capturing pieces," ultimately placing the opponent in a position of death. On the evening of April 8, local time, President Trump gave a speech at a fundraising dinner for the National Republican Congressional Committee (NRCC), stating that his tariff policy would force other countries to give "everything" to the U.S. because "they don’t want us to tax them."

According to Trump's ideal blueprint, tariffs are not added all at once—it is purely an economic action—but first under the guise of adding tariffs, thoroughly extorting other countries, draining their resources, and when other countries are powerless to counterattack the U.S., adding these tariffs later, leaving them without any ability to retaliate.

Trump believes that other countries will submit under the U.S.'s tariff cudgel, including his Economic Advisory Council Chairman Stephen Moore, who believes: "Other countries can accept tariffs on their exports to the U.S. without retaliation, providing revenue for the U.S. Treasury." And he believes that the higher the tariffs, the heavier the cudgel, the more countries will submit, submitting sooner, and making larger concessions to the U.S.

In Trump's ideal scenario, other countries would dare not and be unable to effectively counterattack the U.S., allowing the U.S. to achieve full success without loss. Moore summarized: "In 2018, other countries bore the cost of Trump's historic tariffs through devalued currencies, meaning their citizens' purchasing power on the global stage decreased, becoming poorer. At the same time, the paid tariffs were used to fund Trump's tax cuts for U.S. workers and businesses." Because Trump tasted success before, he now wants to impose universal tariffs on all countries in the world. —This goes beyond general economic theory (in fact, the Trump Group looks down on economic theory) and is something McKinley could never have imagined.

After sufficiently weakening other countries and strengthening its own power, the U.S. could then implement debt default actions and simultaneously carry out territorial expansion.

In short, Trump's ideal plan can be divided into five steps: Step 1, impose incomprehensible tariffs; Step 2, repeatedly extort and oppress other countries through the tariff cudgel to yield; Step 3, after weakening other countries, impose even more incomprehensible tariffs; Step 4, default on debts to escape debt crises; Step 5, after fully reaping and weakening other countries, achieve territorial expansion and consolidate hegemony. Throughout this process, constant fickleness and betrayal are required.

Therefore, many people say that Trump just wants to save the U.S. through tariff-driven changes. —This statement is incomplete. Trump indeed wants to save the U.S. through tariffs, but he also wants to plunder other countries, shift the costs of change to other countries, extort other countries, and expand. This is called the U.S. getting sick and other countries taking medicine or bleeding.

Some also say that Trump doesn't really want to impose tariffs but just wants to use tariffs as leverage to force other countries to negotiate. —This statement is incorrect. Trump still wants to impose tariffs. He just wants to first use tariffs as a cudgel to force other countries to negotiate. After squeezing them dry, he will impose tariffs again.

Trump brandishing his "White Paper on Trade Barriers"

Some say Trump is not belligerent and seeks peace. —That's not true. Now everyone realizes that the tariff war is Trump's method of warfare. Directly launching a military war would cost a lot of money, which Trump is reluctant to spend. He hopes to gain the benefits of war through a trade war without spending money.

This is an unconventional path, not a normal economic path, but rather a form of political oppression. A country adopting such policies cannot be understood as a normal country but must be interpreted according to the standards of a rogue. This can be summarized as: the international economic and trade landscape was set up by Americans, the rules were made by Americans, and Americans have profited greatly from the game. But now, because of internal disputes over profit distribution, they complain about being shortchanged, want to renege, and want to push their internal costs onto others, forcing others to bear the burden, and endlessly shifting it. This behavior is absolutely unacceptable.

Some Chinese people say we need to understand American behavior. But the word "understand" in Chinese implies tolerance and even support. We cannot tolerate or support such behavior from Trump because it is essentially that of a rogue. So there is no "understanding," only "recognition."

China has seen through America's tricks and identified its repeated attempts at extortion and "putting the opponent in checkmate and capturing pieces" under the guise of adding tariffs. Therefore, China did not give Trump the opportunity to implement extortion through negotiations but directly retaliated with equal tariffs, engaging in a dialogue of comprehensive national strength with Trump. This caught Trump completely off guard and also plunged the U.S. economy and capital markets into panic. Thus, we can see the U.S. stock market plummeting consecutively under the impact.

Trump adopted an aggressive approach this time, imposing universal tariffs globally for another purpose: to create chaos in the global economy and then take advantage of the chaos to fish in troubled waters, helping the U.S. escape its current debt crisis. However, China gave a firm counterattack, pushing the chaos back to the U.S. domestically. As a result, the U.S. tactic of deliberately creating global chaos to fish in troubled waters and stay out of it failed, leading to self-immolation. Thus, we can see increasing conflicts within the U.S.

Can Trump unite countries to blockade China?

Many Chinese people worry that Trump's trade war might actually target China alone, while luring other countries with benefits to jointly blockade China. After Trump announced a regional suspension of tariff increases on April 10 but continued to increase tariffs on China to 125%, this seemed to confirm this point. Many people worry that the U.S. might use the tariff cudgel to demand concessions from other countries—if indeed many countries comply, China might be isolated.

However, upon deeper analysis, it becomes clear that this is also impossible to achieve in general.

Firstly, it can be clearly stated that Trump will not take this path. In fact, this is essentially the path taken by the previous Democratic administrations of Obama and Biden. Trump's personality determines that he will not take the Democratic path. This is point one.

Another important issue is that this path has long been proven unsuccessful and cannot promote the return of U.S. manufacturing. It may even have the opposite effect. On one hand, if the U.S. imposes relatively low tariffs on other countries—and much lower than those on China—to lure other countries, China can use these countries as transit points to export to the U.S.

Potential transshipment trade carrier in the future

In this case, not only would the goal of weakening China not be achieved, but these countries engaged in transshipment trade would also earn money from the U.S., which Trump clearly does not want. Trump believes that including the EU, these countries are taking advantage of the U.S. in their trade with it. Moreover, more importantly, doing so would not bring manufacturing back to the U.S. After comprehensively encircling China, manufacturing might flow out of China, but it would not enter the U.S.; instead, it would enter other countries. Therefore, Trump must impose universal tariffs on other countries.

Secondly, different countries have different situations and it is impossible for all countries to submit to the U.S. A certain proportion of countries and regions will choose to adopt a tough stance toward the U.S. Currently, apart from China, countries like Canada, the EU, and the UK have also expressed relatively strong stances.

Thirdly, if some countries submit to the U.S., it might be beneficial for China. For example, Vietnam previously clearly stated its intention to negotiate with the U.S., willing to achieve tariff parity with the U.S., pushing both sides to reduce tariffs to zero. If this goal were truly achieved, how would it harm China significantly?

For Vietnam, its founding principle is to rely on its role as a bridge in trade between China and the U.S., importing from China and exporting to the U.S. If the U.S. wields the tariff cudgel, Vietnam is likely to buckle under the pressure. Because if it cannot export to the U.S., its economy will encounter significant problems.

However, if Trump, after suffering China's counterattack, genuinely achieves zero-tariff parity with Vietnam to win it over, this is actually what we would like to see, as Chinese goods can continue to be exported via Vietnam. Similarly, this logic can be extended to other countries in the world. Therefore, partial submission by some countries to the U.S. does not harm us much, and might even be beneficial.

However, if the U.S. continues to pressure Vietnam and does not allow it to benefit from exporting to the U.S., Vietnam would have to side with China. If the U.S. does this universally, it would isolate itself, unable to fully obtain the goods it needs. Shortages of goods would be uncomfortable for itself, and Americans may not be able to persist long-term. Meanwhile, pushing all countries toward China would be beneficial for China to establish a new international economic and trade order led by itself.

Of course, someone might worry that if the U.S. agrees to reduce tariffs for Vietnam, the condition might be that Vietnam must agree to impose tariffs on China or even sever ties with China, isolating China. What then?

To this, my answer is: if Vietnam cannot import from China, it will have nothing to export to the U.S. In that case, what is the significance of giving it zero tariffs? Moreover, this way, it would offend China and lose both the Chinese and American markets, doubling its losses.

Finally, these countries actually cannot surrender to the U.S. even if they wish to. That is, they want to surrender but cannot. Because the U.S.'s ultimate goal is to drive manufacturing to the U.S., when these countries all surrender to the U.S., the U.S. will still impose tariffs on them eventually, and they cannot escape, as this is the U.S.'s final goal.

For instance, after Vietnam became weak, the U.S. imposed even higher tariffs on it. Even after Israel expressed its willingness to have tariffs reduced to zero for imports from the U.S., the U.S. did not revoke the additional tariffs it imposed. The U.S. hits harder whoever shows weakness. This is Trump's character and consistent style.

Thus, ultimately, Trump will force the other countries subjected to additional tariffs to unite and collectively oppose the U.S. Because gradually everyone will realize: the U.S.'s ultimate goal is to take your money and then take your life. Taking money comes first, taking lives comes later, and taking money is to better take lives. The "art of negotiation" and tariff coercion are merely tools to better suck the blood of other countries. Given this, why should countries let the U.S. bleed them in the first place? Some countries might lack clarity, but it is impossible for all countries to be blinded by the U.S. simultaneously.

Therefore, there is no need to overly worry that all other countries in the world will unite under U.S. pressure to jointly oppose China and blockade China, as countries will gradually become clearer about the U.S.'s real intentions.

Trump's Tariff Policy Will Definitely Fail

Based on multiple analyses, Trump's universal tariff extortion policy will definitely fail because:

Firstly, Trump's trade war will directly cause chaos in the global industrial chain, and the U.S. cannot gain any benefits from this chaos.

Objectively speaking, if there were no China in this world, after Trump caused chaos globally, industrial capital might indeed only go to the U.S. for investment to seek a stable investment environment. However, with China in existence, industrial capital found that besides the U.S., it could also go to China. China's business environment is far better than the U.S.'s, with much better policy certainty and industrial chain conditions. Just like after the Russia-Ukraine conflict, part of Europe's capital went to the U.S., and part came to China.

Secondly, Trump's trade war has made other countries and businesses wary of the U.S.

Because countries will find that the U.S. is unpredictable and untrustworthy. In the future, if the U.S. has money to make, people will naturally still go for it. But people will simultaneously look for alternatives to U.S. imports, meaning they will try not to buy U.S. goods if possible. In the past, some alternative products, such as weapons and high-tech products, were hard to find, but now China can provide most of them. If this trend continues, the U.S.'s trade deficit might not only fail to shrink but could even expand. For example, now consumers in Europe, Canada, and China are starting to refuse to buy U.S. goods.

Thirdly, the U.S. may hope to strike at China through imposing high tariffs, but this is impossible to succeed. On one hand, we must recognize that these policies will certainly bring some losses to China. But on the other hand, the losses are not that significant (a separate article analyzes this in detail), and in some aspects, they might even bring corresponding benefits. There is no need to be overly worried.

Fourthly, more importantly, the isolation of China that the U.S. hopes to achieve through the tariff cudgel is definitely unattainable unless the U.S. genuinely offers benefits to other countries (this is a necessary condition, not a sufficient one). But everyone can clearly see that the current U.S. cannot offer any benefits to other countries.

According to Trump's goals, after using the tariff cudgel to force other countries to ally and blockade China, the U.S. will eventually eat them up. Individual small countries might be helpless under the U.S.'s tariff pressure, but slightly more powerful countries will surely see through the U.S.'s true intentions and inevitably drift away. Therefore, the greatest possibility of the U.S.'s approach is to isolate itself. In the long run, it will push countries outside the U.S. to form an alliance, creating a new world market.

Fifthly, the U.S.'s approach will prevent supply from fully meeting domestic needs. Improving productivity levels is very difficult and cannot happen overnight. Even if the U.S. forces other countries to invest domestically, it won't happen quickly, and the long-term outcome is highly uncertain.

After numerous twists and turns, the first phase of Taiwan Semiconductor Manufacturing Company's (TSMC) wafer factory in Arizona, USA, finally began producing 4nm chips for U.S. clients.

The logic behind the U.S. Treasury Secretary Scott Bechtel representing the Trump administration to force industries back home through tariffs is completely unachievable. These years, the U.S. has forced many companies to invest domestically, and which of them has succeeded? In this way, the U.S.'s universal tariff increases will not only exacerbate domestic inflation in the short term but also look bleak in the long term, making life difficult for ordinary Americans. Many people also clearly see this.

Sixthly, U.S. manufacturing will only get worse. After isolating itself from the international market, the U.S. will suffer greatly, and its manufacturing will slowly fall behind, becoming much worse than it is now. At least the U.S. is still the world's second-largest manufacturing powerhouse. If the U.S. truly isolates itself, it may fall further behind in the future. China continues to open up, while the U.S. increasingly closes itself off, so the U.S. will only become more passive in the future.

Finally, and perhaps most importantly: as long as China exists, the U.S.'s so-called powerful military strength cannot flaunt its power, cannot rob the economy of other countries everywhere. Without the support of U.S. military planes and cannons, tariff policies cannot fully exert their strength. The U.S.'s military threats and tariff cudgel strategy will ultimately come to naught.

In this way, the U.S. discovers that it cannot truly force manufacturing back to the U.S., reduce the trade deficit, or effectively strike at China. It also cannot unite countries to jointly oppose China, nor can it quickly meet domestic needs. Ultimately, the U.S. will discover that after going through this ordeal, domestic manufacturing will not progress but will instead fall further behind. Meanwhile, the U.S.'s military strength will also accelerate its decline. In short, Trump's trade war can only end in self-inflicted injury. The results of the last eight years of trade wars are like this, and it will still be the same in the future.

During the Liberation War, when the Nationalists had a temporary strong offensive, many party members were very worried. At this time, Mao Zedong warned party comrades not only to see our own difficulties but also to recognize that Chiang Kai-shek was facing even greater difficulties. It's the same now. Although the U.S. is coming strongly, China will definitely face considerable difficulties. But we must also see through the U.S.'s outwardly strong but inwardly weak, fierce but cowardly true nature. As long as we adopt a resolute and correct response method, with reason, advantage, and measure, striking steadily, accurately, and forcefully, we will surely achieve victory in the struggle.

Of course, we should remain clear-headed. Trump's trade war with the world is a necessary step for the U.S., the result of the interaction of various forces within the U.S., painful but unavoidable, and bound to fail. But this also determines that the traditional international economic and trade pattern cannot be maintained anymore. Therefore, China also has to make difficult choices. The entire economic model must be reconstructed. The previous domestic model of suppressing wages and consumption to subsidize exports and earn foreign exchange must undergo a comprehensive transformation. And the trade war provides an important opportunity for China's economic transformation.

In the near future, China's economic growth may slow down to adapt to the transition from high-speed growth to high-quality development. However, the living standards of ordinary people should and must see a significant improvement, and new business opportunities will be built on the foundation of higher living standards for the Chinese people and a new development model. Without this, China will not be able to effectively respond to the trade war and steadily move into a new historical development phase.

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Original source: https://www.toutiao.com/article/7492242007121756707/

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